Do you put money aside regularly to help cover your tax obligations?
Businesses in Australia that are registered for GST are required to regularly submit Business Activity Statements. This could be monthly, quarterly or annually. (If you are paying a contract bookkeeper to do this, they must be a registered BAS Agent).
If having to come up with money to cover your ATO obligations is causing you stress why don’t you review amounts owing more regularly and put them aside into another account? This idea works equally well for larger businesses or sole-traders and freelancers.
GST – generate GST report for the past month. Subtract GST paid amount from GST collected amount. This is what you owe the ATO.
PAYG withholding – generate payroll reports for the previous month to find out how much you withheld from employee pays.
PAYG instalments & fringe benefits tax – check previous BAS to see what instalment amounts are going to be due with your next BAS.
Transfer the total amount from steps 1-3 into another bank account.
Repeat on a regular basis eg monthly.
Not only do you have the money sitting there available to pay your BAS liability when it falls due, but you can also pay your other expenses with confidence knowing that your tax obligations are taken care of. So easier business decisions, less stress and improved cashflow overall.
I just had to share this bookkeeping tip – it’s too good to keep to myself.
If you use Reckon for bookkeeping, you’ve no doubt used the “Find” feature at some stage to track down a past transaction. It’s quick and easy to use and I couldn’t do without it. Ctrl + F are the shortcut keys.
But just using the Find feature isn’t my tip.
Do you have transactions throughout the year that you aren’t 100% sure you have entered correctly and that you want your accountant to have a look over before your financial reports are finalised? Perhaps you have some GST transactions that you want your BAS Agent to look over before they prepare your BAS?
Well when you enter those transactions simply type “??” into the memo field. When it comes time to meet with your accountant or BAS Agent you simply use the Find feature (Advanced tab) to search for those transactions and generate a report. You can either print this off or memorise the report so that your accountant or BAS agent can simply click on each transaction and be taken straight to it.
No more having to stop and write down your queries on scrap pieces of paper or scrambling to remember what it was exactly you had trouble with throughout the year!
I can’t take full credit for coming up with this idea. It’s a gem of advice I picked up when I recently attended a Reckon workshop that I wrote about in my post So I attended a training workshop today.
Even though we have had the Goods and Services Tax here in Australia since July 2000 there are some GST rules that are harder to remember than others – particularly if we aren’t entering these transactions on a regular basis. Included here are some of the more common errors.
Claiming all of the GST of an expense that is part personal – you can only claim that portion of the expense relating to the business.
Claiming GST credits for contractors or suppliers not registered for GST
Claiming GST credits for residential rental property expenses
Claiming GST on the total of business insurance policies – GST cannot be claimed on the stamp duty component of the premium. For more info on GST and stamp duty, click on the link to my previous article Entering Transactions with GST.
Claiming GST credits for bank fees and charges.
Not claiming GST credits for credit card merchant fees
Claiming GST credits for wages and superannuation
Claiming GST credits for fines
If in doubt about the way you are entering any of your GST transactions, it is a good idea to speak to a BAS agent, accountant or to refer to the ATO publications on GST, which can be viewed online or sent out to you via post.